5 Considerations to Design the Perfect Compensation Plan

Compensation is possibly the most important and the most contested part of the sales department.  Heads of sales, human resources, and finance often have different views of what is the optimal compensation structure.  While there are many ways to determine compensation, there are several factors that should be considered when designing your plan.



Process or Talent? Which do you take?

That’s an easy one.  Process always trumps talent.

Before you get upset and start defending how talented your staff is and that you couldn’t generate the numbers that you do without them, imagine how much more productive they would be if you gave them leads that close at four times the normal rate?  Or if you have sales events for them to use that routinely lead to $100,000 days?

I’m not going to completely define what process should be in place, but I will say that as a sales manager, process always trumps talent. Here is why.


Selling in a Tough Environment

Lets face it, most of us work in a difficult sales environment.  This doesn’t mean that we sell a bad product or work for a bad company/organization.  What it means is that we face fierce competition or work in an economy that is weak.  When unemployment is up, like it is in a lot of cities, it makes it very difficult to sell a product that can be labeled as a discretionary or “luxury” spend.  Put in competition for those discretionary dollars and you now face a difficult selling situation.

Given that we’re in these situations, it doesn’t make any sense to make it difficult to buy.  However, some of us still do that.  Status quo does not work in these situations.  So, whether you work for a team in the middle of a labor situation, work for a team that has no owner or an owner in financial distress, or you simply work for a team with a “rebuilding” product.  You can still put up league topping numbers if you create a low barrier to entry and sell your sellable assets.


Effort or Experience? If You Must Choose, Which One Do You Pick?

The ultimate question for managers.  Most want both, and if you can find a salesperson that does both, do whatever you can to keep that person forever.  However, many times it’s a struggle.  For one reason or another, experience leads to less effort and sales behaviors that have the potential of harming the department.

So I ask the question – How do you handle the experienced salesperson who can put up some numbers but doesn’t exude the principles and effort that you would like in your department?

Here is the rub.  Salespeople believe that as long as they are putting up numbers that everything is okay.  They believe that revenue dominates every other action that may be displayed.  To a certain point, they are correct, however, we all know that other actions are taken into consideration.

This situation can be defined in that age old saying “Risk vs Reward”.  How much do you value this salesperson’s production versus the potential damage that is being done to the department. (more…)

Create an All-Star Roster

Every person who works in sports tends to loves sports and most think they can be a general manager.  They read the sports pages and talk around the cooler about how lousy of a job the local team’s general manager is doing.

Think further about this.  If you are a hiring manager, aren’t you, in essence doing the same job as a sports general manager?  You are managing a roster of people who have a common task to achieve, right?  Haven’t you made that “can’t miss” hire who interviewed well but didn’t deliver on the (sales) floor?  And if you have a stingy HR department that is over processed, you may as well be working with contracted employees since you can’t move on the bad ones.  Seems like you might be stuck with the roster that you drafted (hired).  You’re doing the same job just in a different function, look at it that way and it’s not so easy to be a general anymore huh?

If you can avoid the Jamarcus Russell picks while assembling a mix of superstars along with some role players, you’ll be set.  Just like any GM would.  There are some tips to help avoid these pitfalls, read below. (more…)

Find Better Talent

Sales managers spend a lot of time interviewing potential candidates.  The unfortunate thing is that most of this time is wasted because the interview process isn’t effective.  What I mean is that the interview itself is often canned and a true feel for the candidate is not received.

How can we make it more effective?

Some things are better than others.

Their personality is better than yours:  I don’t mean this in true fashion.  What I mean is that managers inadvertently look for people who act and have the same background as them.  This is often a mistake as the only person who can be you is you.  Just because a candidate doesn’t have the same work experience, doesn’t mean they won’t be a killer employee.





Why is this?  Its because there is a disconnect between salesPEOPLE and sales managers.

Sales managers want to ensure their salespeople are working…while sales people, especially veteran sales people, want to do things their own way and not be micromanaged.

Can’t we all get along?

Here is the true fact, if the system is used correctly it is a benefit to both parties.

How can it be used effectively? (more…)

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